Many of the laws that give us our consumer rights can sound a bit boring and are often hard to understand. That’s where I come in!
One of the most important laws we have is the Consumer Credit Act 1974 (CCA), which covers a range of rules around credit, how it’s sold and what happens if things go wrong. The act has been amended loads over the years, but it’s creaking a bit around the seams. That’s why the Government proposed updating it and changing a few things. Then it all went a bit mad.
The CCA gives us loads of rights, and journalists and consumer rights campaigners like me all panicked that the act was about to be watered down. This matters because many of the refunds you’ll have received over the pandemic came about as a result of section 75 of the CCA. So any attempt to take these away from us during the cost-of-living crisis will not be tolerated. The Mirror and I are watching closely…!
Here’s my guide to the act – and what you need to know.
Section 75 claims and how they work
If you’ve paid for goods or services on a credit card and something goes wrong, you’ve got more rights than you think. It sounds a bit legalistic, but section 75 of the Consumer Credit Act can help you get your cash back. The act covers a huge range of situations, for example, if your online shopping doesn’t turn up, or the business that’s building your conservatory goes bust or you’ve been tricked in to taking out a dodgy timeshare.
There are loads of ways to pay for things when you go shopping. But no matter whether you’re online or on the high street, you have certain rights if you pay by credit card that you don’t have if you pay by other methods.
These claims are made under what’s known as ‘section 75’ of the Consumer Credit Act (section 75 is the section of the act that applies to purchases like this).
It’s not all straightforward though. Claims made under section 75 have to meet certain criteria and are looked at on a case by case basis by the card provider.
How do I know if I’ve got rights under section 75?
If you pay for goods or services on a credit card that cost between £100 and £30,000, the credit card provider is jointly responsible, along with the supplier, for any breach of contract or misrepresentation. This can involve goods not turning up, items that are damaged or don’t do what they are supposed to do or situations where you’ve been misled by the supplier. You don’t need to complain directly to the supplier either – but I strongly recommend you do (it’s only fair).
You’re even covered if you’ve only paid for a deposit for something on your credit card – and in theory, that deposit amount can be under £100 as long as the total cost of the goods is between £100 and £30,000. In cases like this you’re still covered for the whole value of the item in question. So if you pay a £100 deposit for a sofa that costs £2,000 on your credit card and the rest in cash, if the firm goes in to liquidation the card provider would in theory have to pay you the full £2,000. In fact, the wording around deposits is pretty unclear in the act, so once again in theory, even if you’d paid a pound on deposit, you might be covered.
I’d be willing to bet this part of the act gets changed…
The rules and the quirks
There are a number of other conditions that must apply before you make a claim:
- The card provider must be based in the UK, though you can complain about purchases made to businesses overseas.
- You are only covered if you buy direct from the supplier, not a third party. This is known as the debtor-creditor-supplier relationship and it’s enormously complicated. If in doubt, put a claim in anyway.
- Debit card payments, cheques and transfers are not covered by the Consumer Credit Act, though you may be able to make a ‘chargeback’ if there’s a dispute with a debit card payment.
- Though section 75 of the Consumer Credit Act is a great piece of legislation, it is still open to interpretation. So though it makes sense to pay for items on a credit card just in case something goes wrong, it does not guarantee that you’ll get your money back.
A few other quirks
Much as I love the Consumer Credit Act, it’s even older than me! And though it’s been updated a few times, the way it’s worded doesn’t always fit with the way we live and shop today.
For example, you may not be covered if you’re paying for something using an ‘electronic payment system’ like PayPal. Many people have a credit card as the main way of paying through these websites. But some credit card companies dispute that the law covers this. I have to say, I don’t agree, but until this is addressed in a court case or the Government consultation, it’s likely complaints about section 75 claims and payments by this method will be turned down.
The tricky part about the law is the bit where it tackles goods and services being ‘misrepresented’. That’s a pretty broad term and it’s why there are lots of section 75 complaints. After all, there’s a big difference between something not working or just not living up to expectations. For example, one of the most contentious and hard-fought areas of complaint when it comes to section 75 claims involve holiday timeshares. Some complaints involve poor construction and damage, others technical problems with booking your holidays. In these cases, it’s really important to explain why you’ve been misled when making a complaint.
Buying through third parties
Most frustrating of all is the dreaded ‘debtor-creditor-supplier’ rule. Of all of the money-related things I have to explain this one is particularly tricky to summarise! Here goes…
To paraphrase the law, in order to have the protection of section 75 you have to buy direct from the supplier of goods. If you go through a third party, you’re not covered as this ‘breaks the chain’. The most common example of this is paying for concert tickets. If you buy direct from the venue or official ticket agency and spend over £100 then you’re covered. But if you buy through a third-party ticket agency, you’re not.
Seems simple? Well, what if you buy from a third-party ticket agency that is one of five appointed ‘sellers’ of the tickets for the venue or artist? In theory, you should be covered. But in practice, you might not be as it’s still a third party. Yikes.
This wasn’t a massively widespread problem. But then around ten years ago, two things happened. More people became aware of their rights and of section 75 – and there had been a boom in cheap credit. Secondly, the way we shop fundamentally changed. Buying online is now the main way most of us shop.
Take holidays. If you book with the airline direct, you’re covered for your flights if they go bust. But if you’ve gone through a comparison site, you’re not. The same goes for all the online holiday booking companies that aren’t offering their own packages and aren’t members of trade schemes.
The same goes for any form of online shopping that aggregates a list of options from other retailers. In theory, buying from a third-party seller through Amazon Marketplace might not be covered under the act (though Amazon has its own complaints process and usually allows these cases). And as I mentioned, using your credit card through e-money services like PayPal is contested by many businesses.
Finally, there are whole untested areas. Buying through comparison sites is – in theory – also not covered. In practice, the services (insurance, banking, etc) aren’t ones that people are usually able to make section 75 claims about. But the services are diversifying, so watch this space.
My tip: Use online sites to compare deals then book direct to ensure you’re covered.
Here are another few key exceptions to section 75
Goods for ‘your benefit’. If you buy a flight on your card for yourself, your covered under section 75. If you buy one for your partner, then you aren’t. This is because the goods must be for ‘your benefit’. This leads to all kinds of arguments (some a bit dodgy/saucy) that the items bought for partners bring them pleasure so therefore they’re for the cardholder’s benefit.
Deposits: If you buy a car for £10,000 but pay a deposit of £100 on your card, your card provider is liable for the full amount in the event of a successful section 75 claim. The rules are a bit vague about whether the deposit has to be over the £100 minimum payment to qualify or not. So one retailer might pay out in full if you’ve paid a £2 deposit, whereas others might refuse unless you’ve paid £100 or over.
Services: The quality of some services and goods can be open to interpretation. For example, if you buy a timeshare, you’ve technically got what you paid for. But what if it’s fundamentally not what you were sold (in a different place, not built yet, falling apart?) Loads of complaints of this nature occur each year. The problem arises because the law uses the term ‘misrepresented’ to qualify for section 75 protection – and that’s widely open to interpretation.
Featured in Mirror – Martyn James